Carbon Tax Ignorance

The carbon tax folks have compiled a large list of economists and past public office-holders in support, with some pretty impressive names on board. The names include such heavy-hitters as Ben Bernanke, Alan Greenspan, Janet Yellen, George Shultz, Lawrence Summers and many more.

Two Florida Congressmen, Democrat Ted Deutch and Republican Francis Rooney, announced they are planning to introduce a carbon tax bill with the money raised paid out as “rebates” to individuals.

The idea of a tax on carbon is that it will cause people to use smaller amounts of oil, natural gas, and coal while driving innovation in the energy sector. But there’s a big problem with this kind of blindered thinking. Energy is not like any other commodity. It is the foundational component of all commodities and our options are extremely limited…

What supplemental energy technologies are available (wind and solar) are unreliable and more expensive. Even attempting to reduce our use of oil, natural gas and coal by a modest amount is a gigantically expensive proposition that will cause many more problems than it will solve. Pretending that a carbon tax will advance the goal of reducing greenhouse gas emissions demonstrates astonishing ignorance or deep cynicism, take your pick.

Any economic shift from free exchange to central planning is always suspect. A move as all-pervasive and expensive as carbon taxation is doubly so.

The up-front economic damage carbon taxation would do is vast. Moreover, does anyone truly believe that if we grant government this much massive new power and revenue, that it will stay within the limits initially promised?

Whether we call it carbon pricing, or more accurately carbon taxation, the correct adjective is dangerous.

Thanks for the reply Tony!
You bring up some very valid criticisms of carbon taxes. It is true that in almost all cases the cost is transferred to the consumer, but I don’t think that this completely negates the tactic’s usefulness. When used in tandem with cap and trade schemes, they really can lower the cost gap between fossil fuels and renewables.
When you think about it on the scale of the individual, if someone wants to install a solar panel array on their roof for environmental reasons, right now the cost of installation does not justify the return in power. If fossil fuels become more and more expensive for the consumer, this could conceivably change.
In addition, developers of renewable energy sources could see an increase in research funding for the simple reason that products like solar panels and wind-farms could become more competitive with their dirty counterparts than would otherwise be possible.
I appreciate that you have a lot more experience in this field than I do, but it seems to me like we have extremely limited options when it comes to reversing the effects of climate change. Unfortunately, reversing climate change is our ONLY option if we want humanity and all other animal life on earth to continue thriving into the next century. Hence, we have to try absolutely everything, even if it means an increase in costs for the consumer.
I also disagree that cap and trade schemes face all of the same problems as carbon taxes. The major difference for me is that the under a cap and trade scheme, the total quantity of emissions can be limited quite effectively. Further, this limit can be reduced year upon year. Cap and trade schemes also provide a financial incentive for carbon majors like Shell to reduce emissions.
This is because if a company can increase its efficiency to the point where they do not use up their allowance, they can then sell their remaining credits to companies who are falling short and make a profit. If they fall short, on the other hand, they face serious losses which, admittedly, will get transferred to the consumer. The difference is that energy providers who do not fall short of their allowances can then make their energy prices more competitive for the consumer.
Thanks again for the reply. I am aware that I am less experienced in these matters, but I would like to know what the issues are with the arguments I have laid out above. Again, I think we need to avoid fatalism at all costs and try anything and everything we can. This issue is too important and too time-sensitive to veto possible solutions before the kinks can be worked out.

The value of cap and trade is a theoretical one only, because in reality, it can not be made to work as the theory proposes. Why this is so is because of the nature of electrical power generation, and following from that, the nature of electrical power consumption itself, and this latter is the most important.

if a ‘Country’ as a whole requires an absolute total power generation to cover ALL of its consumption, then that power generation MUST be in place. That is an absolute.

After following the data now for more than those eleven years, I have seen that those two renewables of choice, wind power and both versions of solar power, Commercial (power plants) and residential (rooftop panels) barely make up 12% of all power generation, and that percentage has plateaued in recent years, and is barely rising by fractions of a percent now. So now you (still) need to find at least 85% of all power generation to cover ACTUAL power consumption. That is made up mostly from coal fired power and natural gas fired power, both CO2 emitting entities. (and Nuclear power in some Countries)

If you lower the cap each year, and if the same amount of power is still being consumed, then those coal fired and natural gas fired plants will still be delivering the same amounts of power, only now paying vastly extra costs ….. because that level of power is still required. So, effectively, with costs passed down to ALL consumers, all you have done is increase the cost of electricity with no benefit at all because those plants still have to deliver the same level of power, hence no reduction in emissions.

The fallacy of rooftop solar power is that it is only of use in the residential sector. That residential sector is a consumer of only 38% (in the U.S.) of all power. Australia now has one of the largest uptakes of rooftop solar power on Earth, and yet it still only generates 5% of all power, That 5% is ONLY in that residential sector (that 38% in the U.S.) which is around 25% here in Australia. So, you still need to find 75% of power for the other two sectors, (Commerce and Industry) PLUS the remaining 20% in the residential sector not covered by rooftop solar power, so you are still looking at finding 95% of power and the most of that will still come from coal fired power and natural gas fired power. Wind power will increase marginally, so the other two will still need to be used as they always have been, only now, it will cost a whole lot more.

And all of this is just in the electrical power generating sector. Extrapolate that out now to the wider use of ENERGY, in Industry and all forms of transportation, which all use the liquid fuels, and you find that you will be fiddling around at the edges, for an enormous cost, and not making any changes of significance at all.

It’s more complex than anyone can conceive, and simplistic modelling is not the answer.

Yes, there will be some serious economic impacts from carbon tax, but there will be much worse economic impacts from having to repair infrastructure following floods, hurricanes, wildfires etc. We have a very limited timespan available to reverse the effects of climate change. Which is more important, that our economy is thriving or that animal life on earth is thriving? Also, you say that it is a poor decision because renewables like wind and solar are much more expensive. Well, part of the appeal of carbon tax is that it reduces the gap between how expensive fossil fuels and renewables are, leading to an increase in research in the sustainable energy sector. We have to remember that carbon taxes are one tool among many that must be implemented simultaneously if we do not want the quality of life on earth (human and animal) to seriously decline in the coming decades. Here’s an article I wrote recently about the environmental considerations of carbon taxes and cap and trade schemes.

The problem with a Tax on CO2 emissions is that it virtually does nothing except raise revenue for the Government who implements it. The nature of any CO2 Tax is that the whole of it, every cent raised from it is paid by the entity who emits that CO2, and the largest emitters are those coal fired power plants. ALL of that cost, every cent of it is then immediately passed onto consumers in the form of raised prices for their generated electricity. So, it’s just a money churning exercise taxing all consumers, with those electrical power generating entities as the middle man, as they then forward that money onto the Government, who might spend it on the environment, or then again, may not, as we are talking Billions here, each and every year, so it will inevitably be used for purposes other than the original intent.

The same applies for any Cap and Trade scheme as well, with all of those costs (and there are numerous of those) also passed down to consumers as well in raised electricity prices.

Also, both schemes give the false impression that they narrow the gap between coal fired power and those renewables of choice, wind power and solar power. It artificially raises the cost of coal fired electricity, well, all electricity really, because the grid is made up of every source supplier of generated power, but the electricity cost for coal fired power is still the same because that extra on top, the CO2 Tax, is just paid for by the consumer, and then forwarded to Government.

As to renewables replacing coal fired power, that is most decidedly not true, and there is no advanced technology in the future to make these two any better than what they are now, very small producers of electricity at a very expensive cost, no matter what green followers might prefer to believe.

You may ask how I can be so confident in all these things. I have been writing about all aspects of power generation and related matters for more than 11 years now. I have seen the Kerry Liebermann 987 page American Power Act from 2010 which covered all these bases, and ended up not being put to Congress, and the same then happened later with the Waxman Markey Bill as well, which also covered these same things, and I extensively covered both in earlier Posts at this site.

I now have more than 1700 separate Posts at this site, the majority of them dealing with all of these matters.

So, tax fuel then employ lots of people to refund the money? Do you get more money back if you drive a Tesla? What happens if you park your SUV in the garage and take a long holiday overseas, do you get a refund even though you’ve avoided the tax?

“Pretending that a carbon tax will advance the goal of reducing greenhouse gas emissions demonstrates astonishing ignorance or deep cynicism, take your pick.”
OR, more realistically, GREED!
This onerous tax will give them more money to waste!
Control of the “UNWASHED MASSES” is these Swamp Rats goal!
VOTE EVERY ONE OF THESE BUMS OUT OF OFFICE! Very simple solution.

Reblogged this on Tallbloke's Talkshop and commented:
The ongoing civil unrest of the ‘Yellow Vests’ in France was triggered by a carbon tax proposal. Resistance to an unnecessary new tax isn’t surprising.

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